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Aligning Policies for a Low-carbon Economy

image of Aligning Policies for a Low-carbon Economy

This report produced in co-operation with the International Energy Agency (IEA), the International Transport Forum (ITF) and the Nuclear Energy Agency (NEA) identifies the misalignments between climate change objectives and policy and regulatory frameworks across a range of policy domains (investment, taxation, innovation and skills, trade, and adaptation) and activities at the heart of climate policy (electricity, urban mobility and rural land use).

Outside of countries’ core climate policies, many of the regulatory features of today’s economies have been built around the availability of fossil fuels and without any regard for the greenhouse gas emissions stemming from human activities. This report makes a diagnosis of these contradictions and points to means of solving them to support a more effective transition of all countries to a low-carbon economy.

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Removing international trade barriers

Although international trade contributes directly to GHG emissions, increased trade can help to achieve economic goals in a GHG-efficient manner, provided that GHG emissions are correctly priced everywhere. Given that emissions are not universally priced, this chapter examines where policies related to trade may be in misalignment with climate change objectives. While concluding that the multilateral agreements of the World Trade Organization do not generally prevent governments from pursuing strong domestic climate policy, the chapter does identify potential misalignments. These include import tariffs on environmental goods, barriers to trade in services and domestic policies designed to support local low-carbon industry but which are restrictive of international trade and therefore potentially counter-productive. The chapter concludes by looking at pricing policies for the machinery of international trade, aviation and shipping fuel, as well as resilience of the global trade system.

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